Gebhart: An inside look at what happened at Sun Oil

When last we left Sun Oil, once a behemoth of the petroleum industry, the first crack seemed to appear in the company's once impenetrable armor.

This was an organization that built ships, sailed the seas in its own tankers, dug oil out of the ground in Texas, refined the crude in a half-dozen refineries, was a forerunner in industry technology and even was experimenting with oil sand fields in Canada. I'm pretty sure they also had a coal mine in Wyoming.

There is no comparison between the Sun Oil of then and the Sun Oil of today.

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So where did it all go wrong? What decisions were made, and perhaps even more important, were not made, that slowly but surely reduced this one-time superstar into a mere bench warmer at best.

To set the record straight, I worked for Sun for about 10 years and loved every minute of it. I never wanted to leave, but in one of the company's "down-sizing" rituals, I was let go. Making the transition easier was the fact that I had been working for two bosses, imports from Atlantic, who I no longer respected.

I mean, how can you respect someone who lies to you? Happily, not all former Atlantic employees were like that. One executive in particular, Ed Osborne, was as straight a shooter as you'll ever find.

I knew a lot of the company's power brokers, and one of them was willing to share his experiences with me. He was a senior executive when he left the company and as such was privy to discussions and decisions that changed Sun Oil forever. Some he agreed with. Many he did not. For these articles, we'll refer to him as" Mr. Insider."

J. Howard Pew was still with the company; and when he stepped down, his hand-picked successor, Bob Dunlap, took control. The company continued to grow, but hit a bump when Bob Sharbaugh succeeded Dunlap. Sharbaugh's decision to take over a company unrelated to the petroleum industry led to his dismissal.

Ted Burtis succeeded Sharbaugh and kept the company on an even keel. His successor as CEO was Robert McClements. According to our Mr. Insider, this is when the company really started to change.

"To begin with, I always had the distinct impression that Bob McClements wanted to be president of Exxon or some other multi-national company," Insider said. "He wanted to be a big political influence. He even had a helicopter pad installed in his backyard.

"We seemed to focus more on international developments in energy than on our own growth. It was during this time that Sun acquired Sunray DX and its refineries in Tulsa, Duncan, Oklahoma, and Corpus Christi, Texas.

"But it also was the time when we exited the Exploration and Production companies in Texas. McClements explained this decision by arguing that the E&P folks "weren't very good at finding reserves."

"Hindsight is always 20-20," Insider said, "but I feel getting out of the oil fields was a major mistake. The big multi-national companies, like Exxon, Shell and BP, are fully integrated. They continue to drill for reserves. It was during this period that Sun began to slowly divest of Suncor, including the oil sands project due to some Canadian regulations.

"Finally, this was when the Pew Trust first started divesting of Sun stock to diversify the Trust holdings. The Pew influence began to wane even more.

"Then came the Bob Campbell era. He was a Senior VP during the McClements years. Bob ascended to the presidency just after leading the acquisition of the Atlantic Refinery and retail chain on the East Coast. We also acquired the Chevron, formerly Gulf, refinery in Philadelphia.

"Sun was becoming a more ruthless place to work. On the 27th floor of Ten Penn Center, the ruthless nature of Sun Company became evident. It was clear there would be no more risky moves during the Campbell administration. The executive team spent more time trying to be the next president than working on how to make the company better.

"Also during this time, there was a need to have something good to say to stockholders every 91 days. We did things for 'today' and eliminated all talk of strategy. Packages for 'early out' were almost always in place. From the early '80s on, Sun was in a constant state of shrinking employment.

"We divested Corpus Christi, sold the Duncan refinery, exited coal production and were looking for alternatives for Puerto Rico as well.

"Once the company went 'outside' and hired Jack Drosdick as president, Sun crossed over from a 'people' organization to an edgy, hard-line style. I could not function in a culture where people and their contributions would not be valued.

"That," said Mr. Insider, "was when I decided to leave."

Ed Gebhart is a retired public relations executive. His column appears Sunday.

NEXT: All well and good, Mr. Insider, but why did Sun close the Marcus Hook Refinery?